Jul 01, 2015

What Comes After SaaS?

Software as a Service (SaaS) has now been a popular licensing and delivery model for approximately 15 years, and tech companies are now starting to think about the next big wave in B2B software. While mobile enterprise and predictive analytics are trending topics, computing power is also on the forefront of companies’ agendas.

TechCrunch recently introduced a concept called “Do-It-For-Me” (DIFM). This combines technology automation with specialized labor to deliver complete solutions to business problems. It revolves around people-powered customer service and code-powered efficiency.

DIFM in the Consumer Space

Historically, customers have always been drivers of innovation. As newer technologies such as social and mobile became mainstream consumer tools, they were migrated into businesses as well. TechCrunch expects the same to happen with DIFM.

According to Anthony P. Lee, General Partner at Altos Ventures, if you’ve taken a ride in an Uber, or ordered from Instacart, or Shyped a package, you are already a consumer in the DIFM economy. In today’s world, countless people are relying on smartphone apps to share and rent services, sacrificing traditional ownership. Additionally, industry observers point to the large population of baby boomers as a lucrative market for DFIM companies to target, as many would pay someone to do a service rather than do it themselves.

Beyond apps, traditional brick-and-mortar stores such as Home Depot are taking advantage of this trend. Home Depot recently rolled out a service that connects shoppers who need help installing purchases such as tile or ceiling fans to local contractors. The company says that its DIFM services business grew 28 percent in 2014, and it expects this growth to continue, outpacing the 9 to 12 percent annual growth in sale of core products. Lowes offers a similar service which it expects to reach sales of $2.5 billion by the end of 2015.

“The market is moving from do-it-yourself to do-it-for-me.” ~Anthony Rodio, Vice President of Home Depot

Similarly, Best Buy’s Geek Squad service has been a huge success for the retailer. Consumers are increasingly growing accustomed to and dependent upon high-touch, people-powered services for everything from groceries to home repair to dating.

The Burden of Software

SaaS-enabled technology companies promoted the model by discussing the merits of businesses not having to purchase, install, and run software, renting it instead as they needed it. However, many end users say that SaaS software requires just as much effort to learn and operate as the old PC and client server models. There are currently tens of thousands of software companies competing for corporate attention. Within marketing, an analyst recently said there are nearly 2,000 marketing software companies, and many CMOs run 50-60 distinct software tools to manage the marketing function. For many business end users, all this software has become a do-it-yourself burden that they want to simplify.

Small Businesses

Large companies have relied on DIFM in some part for many years in order to simplify processes and cut costs. It’s been called “managed services” or “business process outsourcing” (BPO). Most BPO focuses on transferring labor-intensive, white-collar functions to lower-cost economies such as China, India, and the Philippines. IT outsourcing has led the pack, and the global BPO market is now estimated to be worth over a trillion dollars annually.

However, small companies have not quite gone along that path. Small businesses offer a huge market, with 28 million small businesses employing more than half of the U.S. workforce, and nearly 200 million small businesses registered globally. These businesses have complex needs, such as payments, accounting, payroll, tax, inventory, and scheduling. And most small business owners do not have the time or skills to learn a plethora of software tools.

For these companies, DIFM might make perfect sense since user interfaces are usually simple and minimal, with the complexity handled by technology and people in the background. There are already numerous startups offering DIFM solutions to tackle the challenges of small businesses. For example, Bench offers a less expensive alternative to traditional bookkeepers by leveraging automation and in-house experts. OutboundEngine offers a solution to marketing by combining an in-house creative team with mass personalization technology to deliver online marketing on behalf of customers. Up Counsel operates a full-service marketplace for selecting and managing corporate legal talent that is delivered by small firms and independent attorneys.

“Aging Americans aren’t the only ones seeking more services. The do-it-yourself market is maturing and reaching saturation.” ~Bill Sims, Analyst with Smith Barney